Definition
A charge created on movable assets (machinery, vehicles, stock, receivables) as security for a loan, without transfer of possession to the lender. The borrower retains physical possession and use of the hypothecated assets. On default and classification as NPA, the secured creditor can enforce the hypothecation by taking possession and selling the assets under SARFAESI.
Related Terms
Pledge
The delivery of movable goods (shares, FDRs, gold, commodities) by a borrower (pledgor) to a lender …
Charge
A security interest created on immovable property or other assets as collateral for a loan. A regist…
Mortgage
A transfer of interest in immovable property as security for the repayment of money. The Transfer of…
Security Interest
A right, title, or interest of any kind upon property created in favour of a secured creditor as a s…
Need Expert Advice on Hypothecation?
For specific advice on how Hypothecation applies to your debt recovery matter, consult Advocate Subodh Bajpai — LLM, MBA (XLRI Jamshedpur). 25+ years of exclusive banking and debt recovery practice across DRT, SARFAESI, IBC, and NI Act.
Defined by Advocate Subodh Bajpai, Senior Partner, Unified Chambers and Associates